FIN 505 Report HLT

docx

School

University of Illinois, Springfield *

*We aren’t endorsed by this school

Course

505

Subject

Finance

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by EarlResolveBadger8140

Student Managed Investment Fund (SMIF) Project University of Illinois Springfield FIN 505B: Investments Selected Company Hilton Worldwide Holdings Inc. (HLT) Last Stock Price $167.37 Implied Share Price $160.63 Recomme ndation The intrinsic value is lower than its current market value – this is considered “overvalued” and less favorable for investors. My recommendation will be to not invest in HLT shares at this time. COMPANY VALUATION REPORT FOR UIS SMIF Executive Summary Hilton is a leading worldwide hospitality company with 22 world-class brands under their portfolio. As of December 31, 2022, Hilton has 7,165 properties consisting of 1,127,430 rooms 1

and suites in 123 countries/territories. Discussion of risks and opportunities will be researched to emphasize the need of purchasing stock within the Hilton umbrella. The pros and cons will be shared to come up with a final decision on the investment fund project. Part I: General Information Compa ny name Hilton Worldwide Hotels (HLT) Compa ny CEO Christopher Nassetta Other Key Executi ves Jonathan Gray, Charlene Begley, Chris Carr, Melanie Healey, Raymond Mabus, Judith McHale, Elizabeth Smith, Douglas Steenland Compa ny’s busines s Found in 1919, with over 100 years of experience in the hospitality industry engaging in managing, franchising, owning, and leasing hotels plus licensing and marketing properties Compa ny’s main product s Hotels and Resorts -providing hospitality for guests and obtaining loyalty through reward program (Hilton Honors) Compa ny’s market Lodging for business and leisure travelers, trading, and investment Compa ny’s supplie rs Food and Beverage, Advertising and Marketing, Hotel and Tourism, Partnerships with other brands, Software and Programming Compan y’s top competi tor 1 Marriot International (MAR) Compan y’s top competi tor 2 Intercontinental Hotels Group (IHG) 2

Compa ny’s market share HLT 10-K (2022) Opport unities Rising demand for luxury travel; Expanding global brand recognition; Technology advancements; Diversified portfolio Risks Competition, Market dependent, High-debt levels, Limited revenue sources Earnin gs call Who attended the call from the company? Executives and Analysts Tone of management Forward-looking and Optimistic Challenges & risks faced Going into 2024 Questions asked by analysts 1) Accelerating net rooms growth and limited service? 2) Group business and view for next year? 3) RevPAR and EBITDA highlights? Management responses to analysts’ questions 1) COVID-19 influenced limited supply chain; region dependent. 2) Granular analysis, production and conversion, development opportunities 3) Cash flow analysis, corporate expense timing, natural disasters ex: 3

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Israel Future guidance Group and business travel is set to increase; trying to get back to the 6-7% growth rate Suspicious behavior by management Risk and unsureness, overall great communication and straight-forward Most surprised about Corporate expense and budget analysis Difficult parts of the report Being dependent on various issues – the research analysts could have asked better questions, room for research and development to secure future investments. Part II: DCF Valuation 4

Part III: Sensitivity Analysis 5

Part IV: Environmental, Social, and Governance Factors Hilton has implemented factors to create long-term value to its stakeholders. These factors include business modeling, business viability, and long-term loyalty to hospitality (100 years +). The ESG strategy framework established in 2022 tackled all three components: environment (aiming toward a net zero future of carbon, energy, water, and waste), social (career advancement and supporting the communities), and governance (being transparent with overall goals, leveraging public affairs, and focusing on policies and reporting). The risks involved with ESG include climate change, natural disasters, supply chain disruption, health and safety, fraud, and corruption. With the guidance of the board of directors and audit committee, strategic planning is made to help aid stakeholders with their business tactics. Going into future terms (2023-2024), new strategic planning will introduce new environment and social impact goals with quarterly reporting on updated emissions reduction targets. Figure 1: Hilton ESG Report (2021) 6

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Part V: Macroeconomic Environment The environmental impact of 2030 Goals has been reevaluated in 2022. After COVID-19 era, Hilton has implemented strategies to conserve energy and water by reducing intermediate housekeeping unless specifically requested. Hilton partnered with soap recycling program and focused on food waste reduction and donation programs. Although the impact of COVID-19 imposed high risk to the hospitality industry, Hilton is still on track to commit to the 2030 environment goal while being in operation. Contraction in the global economy is affecting the sales and profitability, which is limiting growth for investors and society. Part VI: Decision Following the investor protocol, the risk associated with purchasing stock at this time is not favorable. Considering Hilton’s loyalty program and other environmental factors, the market share may be overlooked and considered for adaptation. My overall advice is to wait a while to see if the stock price will decrease soon to match or be less than the implied share price. Having the stock price decrease will increase future investment, but having the stock price increase will favor current investors based on profitability. 7

References Governance documents . (n.d.). https://ir.hilton.com/corporate-governance/governance- documents Investor relations . (n.d.). https://ir.hilton.com/ Journal, W. S. (n.d.). HLT | Hilton Worldwide Holdings Inc. Stock Price & News - WSJ . WSJ. https://www.wsj.com/market-data/quotes/HLT SEC filings . (n.d.). https://ir.hilton.com/financial-reporting/sec-filings Yahoo Finance . (n.d.-b). https://finance.yahoo.com/quote/HLT/financials?p=HLT 8